Problem 2 Chapters 2-3 Cumberland City Cycles, Incorporated (CCC) rents bicycles of all kinds for use on the biking paths up and down the Cumberland River. The Excel file. Problem 2 Excel Template, includes tabs for: The Un adjusted Trial Balance, T-accounts, with the unadjusted amounts, An outline for the Adjusted Trial Balance, An automatically filled set of financial statements. Review the tabs carefully. The Adjusted Trial Balance is equal to the Unadjusted Trial Balance at this point-no adjusting entries have been made. The financial statements are complete- with amounts before adjustments. Note that Net Income is $3,050 now. Watch what happens as you enter the adjusting entries Below are the necessary adjusting entries that are to be recorded. ALL adjustments are made on an annual basis each December 31. Using the information below, and the amounts on the Un adjusted Trial Balance, prepare the adjusting entries in the T-accounts on the Excel spreadsheet. (A journal page is provided on the following page if you prefer to make the entries in general joumal form first and then put into the T-accounts) Round all amounts to whole dollars. a) CCC counted the inventory of supplies and there is $200 on hand. b) On November 1, 2021. CCC paid in advance $3,000 for 4 months' rent on a small warehouse to store some of the bicycles for the winter months. c) On March 1, 2021, CCC paid in advance 31,200 for a one-year insurance policy. d) The equipment was purchased on January 1, 2021 for $10,000. The equipment has a useful life of 9 years with a residual value of $1,000. (Use the straight-line depreciation method.) e) A local youth group made an agreement with CCC for a winter season pass for its members. They paid CCC S400 in advance for bicycle rentals from November 1, 2021 through March 1, 2022 1 The note payable was issued on August 1, 2021. The note is a one-year, 9% note for $10,000. Record the adjustment for the interest that has accrued. Adjusting Entries DR CR a) b) c) d) e) f) F H M N Cumberland City Cycles, Inc. Income Statement For the Year Ended December 31, 2021 Cumberland City Cycles, Inc. Balance Sheet 31-Dec-21 Revenues Rental Revenue Total Revenues 10,700 10,700 5 7 8 9 10 11 12 13 Assets Cash Accounts Receivable Supplies Prepaid Rent Prepaid Insurance Equipment Accumulated Depreciation Total Assets 2,500 750 1,000 1,200 3,000 6,300 750 600 10,000 10,000 18.450 Expenses Salaries Expense Advertising Expense Utilities Expense Insurance Expense Rent Expense Supplies Expense Depreciation Expense Interest Expense Total Expenses 500 400 7,650 10,000 Liabilities Accounts Payable Unearned Revenue Notes Payable Interest Payable Equity Common Stock Retained Earnings Total Liabilities & RE Net Income 3050 5,000 2,550 18,450 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Cumberland City Cycles, Inc. Statement of Retained Earnings For the Year Ended December 31, 2021 Beginning Retained Earnings Add: Net Income Less: Dividends Ending Retained Earnings 3,050 500 2.550 35
